Rice prices set to skyrocket

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SUPPLY SHORTAGE: Vietnam and India have slashed exports of rice to combat domestic inflation, which is likely to send the price of rice soaring in the Gulf. (Getty Images)

Rice prices across the Gulf could skyrocket after major rice exporters Vietnam and India indicated they plan to slash exports to combat domestic inflation.

Vietnam, the world's second-largest rice exporter after Thailand, announced on Friday it would cut exports by 22%, while India said the same day it has hiked the minimum price for rice exports to $1,000 a tonne, preventing all but the most expensive grades of rice from being exported.

Analysts say the move is sure to push world prices, which have roughly doubled since the start of the year, even higher.

Vietnam and India's announcements come just days after Cambodia said it was banning all private sector rice exports, and just before Egypt bars exports from April 1. Both countries are facing increasing pressure at home as supply constraints tighten, fuelling inflation.

Egypt bans rice sales every year, but has does so earlier than usual this year and after less rice has been exported.

Thailand has yet to imposed restrictions, but there has been talk about implementing measures to boost domestic supply.

Rice-exporters' decision to cut back is likely to send the price of rice soaring across the Gulf. The price of rice in the UAE has climbed more than 50% in the last year, according to data from UAE daily Gulf News.

The soaring cost of food is helping driving up inflation to record levels in the region, forcing governments to subsidies basic foods, such as rice, in an effort to reduce the burden on the consumer.

Saudi Arabia, Kuwait and Bahrain have all introduced or raised subsidies, while Qatar and Oman are looking into similar measures.

The UAE Ministry of Economy earlier this month agreed to allow the Union Cooperative Society chain of markets to sell 16 basic foods at a discount to help offset the effects on inflation.

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